Following an in-depth investigation, the European Commission has concluded that compensation paid by Romania to two Swedish investors for an abolished investment aid scheme breaches EU state aid rules. The beneficiaries have to pay back all amounts already received, which are equivalent to those granted by the abolished aid scheme.

An arbitral award of December 2013 found that by revoking an investment incentive scheme in 2005, four years prior to its scheduled expiry in 2009, Romania had infringed a bilateral investment treaty between Romania and Sweden. The arbitral tribunal ordered Romania to compensate the claimants, two investors with Swedish citizenship, for not having benefitted in full from the scheme.

The revoked investment incentive scheme selectively favoured certain investors and was therefore deemed to be incompatible with EU state aid rules. By paying the compensation awarded to the claimants, Romania actually grants them advantages equivalent to those provided for by the abolished aid scheme. The Commission has therefore concluded that this compensation amounts to incompatible state aid and has to be paid back by the beneficiaries.

Background

On 1 February 1993, Romania signed the Europe Agreement, which institutes an association between Romania, on one hand, and the European Communities and its Member States on the other. Under this agreement Romania was obliged to comply with State aid rules already before accession to the EU.

In 1998 Romania set up a State aid scheme to attract investments in disadvantaged regions assuring, among other advantages, tax breaks and exemptions or refunds of custom duties on raw materials. The scheme was to remain in place for 10 years, starting from the date a region was officially designated as disadvantaged. As part of the process of accession to the EU and in order to align its incompatible State aid schemes with EU State aid rules, Romania abolished the scheme in question in 2005, since the incentives under the scheme were deemed to be incompatible operating aid.

The non-confidential version of the decision will be made available under the case number SA.38517 in the State Aid Register on the competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.